LGBTQ Controversies Can Be Costly to Retailers

Several high-profile consumer companies have come under fire in recent weeks for celebrating the LGBTQ community. Anheuser-Busch’s Bud Light came under fire for a partnership with trans influencer Dylan Mulvaney, while VF Corp.’s North Face drew backlash for an ad featuring a drag queen. In addition, Target and Kohl’s have been criticized for Pride-themed merchandise displays related to Pride Month (June).

Those companies have paid dearly from such controversies, a CNBC report notes, in the forms of lower sales and falling stock prices – at least at the start. But a couple of experts told the business cable news channel that consumer-facing companies also take a risk by not showing support for the LGBTQ community.

“If you build your argument to consumers only on the stuff, only on the features, only the functional utility of what it is that you do, then competitors can come in and offer that, just a copy of that, and claim that  they have a better mousetrap,” said Americus Reed, a professor of marketing at the University of Pennsylvania, in an interview Wednesday on CNBC’s “Power Lunch.”

“So a bit of … why it is so attractive to align with purpose and these sorts of issues is that … it gives you an opportunity to link more deeply with consumers,” Reed said.

In fact, those strong relationships are usually why boycotts fail to hurt a company’s sales longer term, according to Brayden King, a professor of management and organizations at Northwestern University’s Kellogg School of Business. He said research shows that for every consumer who stops buying a product, another will begin a “buycott” by purchasing items to show their support for the opposite side of the issue.

Still, with threats coming from both sides of the issue, and stocks suffering sharp selloffs, companies may proceed a bit more cautiously.

“They may internally continue to embrace those values as important to their culture and identity, but externally they may be more risk adverse in terms of how they communicate those values,” King said.

Click here for the full CNBC report.